A personal injury is any physical, psychological or emotional injury suffered by a human being as a result of negligent or intentional conduct by another or an accidental injury sustained in the course of ones employment (worker compensation claims). Physical injuries can arise from involvement in an automobile accident, a common carrier accident (railroad, airline, and bus), a construction or other workplace accident, a dangerous or otherwise unsafe product (product liability) and other injury-causing situations. Personal injuries are not, however, limited to physical injuries. Claimants can recover for psychological harm as well. Psychological personal injuries are typically caused by psychological trauma associated with life-threatening or disfiguring physical injuries, a result of witnessing others suffer trauma, or the result of one's escape from serious injury following a traumatic event. The types of damages the injured party may recover include lost wages, loss of earnings capacity, pain and suffering, and reasonable medical expenses. Damages can include both present and future expected losses. Depending upon the type of conduct that caused the injury, the injured person may sue for an injunction to prevent the continuation of the tortuous conduct or for monetary damages. Motor vehicle crashes are the leading cause of injury morbidity and mortality in the United States, accounting for more than 40,000 deaths and 6 million injuries every year.
The current personal injury claims resolution mechanism consists of an injured party, a tort-feasor and, in some cases, the tort feasor's employer. The tort-feasor is the person or entity whose negligence caused the injury and who is the potential defendant in a civil action initiated by the injured party. Typically, the tort-feasor is represented by an insurance liability carrier before and during trial. Initially, the parties will attempt to settle the claim out of court. Liability insurance companies initially use claims adjusters. Adjusters have no specific training regarding the valuation of claims and no specific, reliable, consistent and measurable standards by which to value a claim. Each claim is treated as a separate entity and factors are weighed according to the experience of the individual adjuster.
The injured party, or claimant, may represent himself/herself or hire an attorney to represent him before and during trial. Lawyers who represent injured parties have no specific training regarding the valuation of claims and no specific, reliable, consistent and measurable standards by which to value a claim. Lawyers also treat each claim as a separate entity and factors are weighed according to the experience of the individual attorney or, at most, experience within the law firm.
The only somewhat objective standard used by insurance companies and lawyers in their claims valuation mechanism is jury verdict information. Each party uses the threat of a trial to force the other to settle the claim and neither party, at least initially, will agree to a settlement that it considers less favorable than its expectation of the outcome at trial, including the uncertainty and costs of the litigation. Because juries apply uniquely local standards when awarding compensation, awards for the same type of injury vary widely from one location to another and perhaps even in the same geographic region. Nevertheless, the location of the potential trial is an objective factor in the settlement of most personal injury claims without regard to the nature of the claim or the injuries suffered.
In practice, the settlement value of the claim is determined in most cases by multiplying the claimant's medical costs, often referred to as “specials”, by a factor that is negotiated by the parties. Specials are the incurred cost of medical treatment including physicians, institutional care, prescriptions and disability compensation. The insurance adjuster typically offers to settle the case for an amount that is 1.5 to 5 times the total monetary value of the specials. The usual claim is settled for an amount that is 1.5 to 5 times the monetary value of the claimant's specials. Lost wages and property damages are added to create a total settlement. The number by which the claimant's special damages are multiplied to reach the settlement amount is the settlement multiple. Therefore, the critical factor in valuation of claims is determining the appropriate settlement multiple for the specific case. Currently, the settlement multiple agreed upon depends on the relative negotiation skills, experience and reputations of the claims adjuster and the lawyer. Consequently, while the fact of having a lawyer will likely increase the settlement amount, the lawyer selected may have a greater bearing on the amount paid. Likewise, the skill and experience of the opposing insurance adjuster or defendant's attorney may negate the relative value of an attorney. The settlement values may be expressed as monetary currency, non-monetary currency or a combination of both monetary and non-monetary currency.
The current personal injury claims settlement mechanism has no reliable, consistent and measurable standards by which any actor in the process can accurately estimate the monetary value of a claim for personal injuries. The absence of reliable, consistent and measurable standards means that the end result is based more on the relative advocacy skills or experience of the competing parties than any objective analysis. These effects are particularly dangerous for the average claimant who is a layman and who has little idea of the value of his claim or how any value will be determined. The typical claimant does not have sufficient reliable and accurate information about the claims settlement mechanism to make even basic decisions about the best way to protect himself and his family against less than honorable insurance adjusters, health care providers or lawyers. His ignorance of the potential monetary value of his claim makes him unable to know when to accept a reasonable settlement offer or when to reject an unreasonable offer. He is totally dependent upon information and opinions provided by people whose motives are suspect and whose information is also limited.
The current claims valuation mechanism also causes insurance carriers to contribute to the rise in litigation and cost of claims. Often carriers will make initial settlement offers that offend the honest claimant and that drive him to seek advice from an attorney. Often carriers pay fraudulent, false or exaggerated claims, especially when the claimant simply accepts the initial offer. Carriers are then required to maintain and to increase the amounts maintained for loss adjustment expenses, thus driving up the cost of insurance premiums.
The existing claims valuation mechanism invites fraud. The case by case approach to resolution prevents lawyers and insurance carriers from seeing the bigger picture of phony claims, contrived injuries and inflated or false medical charges. Case by case resolution precludes or delays detection of fraudulent collusion between claimants, lawyers, tort feasors and health care entities. Case by case resolution also fails to detect fraud related to inflated or fraudulent medical charges. The current claims valuation mechanisms do not take advantage of or utilize historical data taken from settled case files to ensure that similarly situated claimants are treated similarly.
Previous inventions have focused only on administrative management of insurance forms or law firm claim forms, case files or customer files or on automating a dispute resolution process to facilitate the claims settlement process. Previous practice and previous inventions have not focused on development of an objective method of establishing the settlement multiple for a new claim using data from previously settled cases.